Glossary

1099-NEC

The form a business sends an independent contractor. The threshold jumps from $600 to $2,000 for 2026 payments — but the income is taxable either way.

Form 1099-NEC, Nonemployee Compensation, is the IRS information return a business files when it pays $X or more in a calendar year to a nonemployee — an independent contractor, freelancer, gig worker, consultant, or board member.

The threshold change. Until 2025, businesses had to issue a 1099-NEC for payments of $600 or more. OBBBA §70433 amended IRC §6041(a) and §6041A(a)(2) to raise that threshold to $2,000 for payments made on or after January 1, 2026. Starting in 2027 the $2,000 figure indexes for inflation.

The rule that does not change: income is still taxable. Under IRC §61(a), gross income includes “all income from whatever source derived.” If you earn $1,500 driving for a delivery platform in 2026 and never receive a 1099, that $1,500 is still income, still reported on Schedule C, and still subject to self-employment tax. The threshold change governs whether the payer must file paperwork — not whether the earner owes tax. This is the single most misunderstood change of OBBBA.

1099-NEC vs. 1099-K. 1099-NEC is issued by businesses paying contractors directly. 1099-K is issued by third-party settlement organizations (PayPal, Venmo, Stripe, Etsy, eBay, Cash App for business). OBBBA §70432 separately restored the 1099-K threshold to the original $20,000 and 200 transactions — retroactive to 2022. The two thresholds are independent; you can get either, both, or neither for the same income.

What’s on the form. Box 1: nonemployee compensation (the big number). The form goes to you and to the IRS, generally by January 31.

Worked example. Nina drives for a regional grocery-delivery app in 2026 and earns $1,850 in app payments plus $400 in customer tips processed by the app. Because the total ($2,250) crosses the $2,000 NEC threshold, she will likely receive a 1099-NEC. Her tax situation:

  • Report $2,250 on Schedule C line 1
  • Deduct business miles at the standard rate
  • Pay SE tax on the net
  • File whether or not she receives the form

If Nina had earned only $1,950, she would receive no 1099 — and would owe exactly the same tax.

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